you zillowed your house to see what it is worth? will talk about their acquisition with spencer rascoff. a new study says dodd-frank is hurting smaller banks. hot new debate over the legislation. with us will be dennis kelleher and bill cohan. it will not be long before we hear play ball. we will sit down with cc sabathia who gives me a few tips in case i am on the field one day. first, a look at our top stories. apple appears to be ramping up plans to build an electric car. people familiar with the matter say apple is pushing its team to begin production as early as 2020. by 2017, they want to build an

electric car that can go more than 200 miles on a single charge. it will cost less than 40,000 dollars. greece in germany are headed for a showdown in brussels. finance ministers meet today over greece's request to extend the bailout agreement for six months. a new headlined says a deal tonight looks unlikely. greece needs the extension to avoid defaulting on its debt. germany has rebuffed the greek request. the german finance minister says greece needs to make a firmer commitment to austerity. here's a greece's debbie prime minister responded. -- deputy prime minister responded. >> at this moment, it appears there are powers that would like greece on its knees so they can impose their will. i believe we can think of what helps our country and what helps these powers. betty: germany is the biggest

contributor to the $273 billion bailout to greece. the parent company ann taylor, looking to sell. working with jpmorgan and reached out to potential buyers. it also owns the loft. the best antitrust regulators are suing cisco to prevent a takeover of u.s. foods. cisco in u.s. foods are the largest companies in the broad line food market. customers include schools, hospitals, restaurants and hotels. sysco says it would fight the case in court. pentagon is planning an adventure to retake iraq's second-largest city from the islamic state. up to 25,000 iraqi troops will be sent to recapture the city of mosul. u.s. advisors will have to train the iraqi soldiers. there are up to 2000 islamic state fighters in mosul. in a few moments angela merkel

and francois hollande are going to meet in paris to discuss the situation in ukraine. we are expecting them to speak at any moment and it comes one year ago since more than 50 protesters were killed in independence square. hans nichols is live in brussels. we are also following the showdown on greece as finance ministers work to strike that deal. as we just heard, one eu official says it is not likely we will see a deal tonight. >> we have three bits of important news in last hour. the eu official is saying it is unlikely you will get a deal between greece and their creditors today. the eu, for the most part has been more optimistic about the prospects of a deal then individual finance ministers. separately, the maltese finance minister has told bloomberg that

he does not think -- he thinks germany has a sizable block that could be willing to let greece leave the euro. that is from a finance minister who is been part of these negotiations. he has been more optimistic. his tone seems to have shifted. thirdly there is a report at der spiegel saying the european central bank is preparing for a potential greek exit and they are doing modeling. you add those stories up, it does not look optimistic in brussels you will have a deal. everyone has said the deadline is friday. we will see if that is the only bit of optimistic news that can come out of this. the friday deadline may be slides a bit. betty: it would have to in order for it not to royal the market -- roil the markets. tell me about the upcoming meeting between angela merkel and francois hollande about the

ukraine. >> they have been dedicated to find some sort of lasting cease-fire in ukraine. the current cease-fire to come to best they worked to come to -- they worked to come to seems to be in tatters. you have 49 attacks in the last 24 hours. question is, what is the next step? you have much of charges and counter charges. the rebels are saying the ukrainian government is preventing the flow of natural gas. you have calls from president poroshenko asking for some sort of absurd tory -- observatory source. that seems unlikely to happen because there is not the bandwidth. it could never be a nato force because that would be an affront to the russian side. we have a fraught situation. it appears the diplomatic attempts have not done a lot for

it. it is unclear what merkel and francois hollande hope to a cop wish. -- hope to accomplish. betty: bloomberg has learned apple is pushing a secret team to begin production on an electric vehicle by as early as 2020. the timeline is aggressive and puts it right into direct competition with tesla and general motors. jeff green, who covers the auto market for us joins us on the phone for michigan. this sounds pretty aggressive. what is going on? >> everybody is looking at what is going to happen with cars. as tim higgins wrote apple is looking to diversify their products. it is an interesting approach. google is in this space. tesla is seen as more of a silicon valley company than an automaker. everybody is looking to see what the future of the car is going to be. there is no guarantee that it

will be gm, ford any of the traditional players. that is the space their coming into. it is already shifting. it is a wide open space for whoever has the best idea. betty: it really is. when we think of electric cars we think of tesla. they are still far away from producing a mass production electric car. who is furthest ahead in that area? >> there is a risk that no one gets there. consumers are not that interested in it. you have the leaf from nissan which is probably the closest thing to a mass-market electric car. there are a lot of risks. the amount of time apple is going to take to bring a car is short. toyota and honda and other automakers have gotten in trouble when he started to shorten their development times and had to lengthen them out. that is where these recalls came

from. they got sloppy and took too little time to work out the kinks. it is not likely your iphone is going to kill you, but cars are more dangerous. betty: a lot goes into building a car, as we know. jeff green, thank you. breaking news on a management change at pimco. paul macauley the global economist, is stepping down. out has more on this news. >> this looks like it has to do with the departure of bill gross. mcculley has been good friends with bill gross for more than 20 years. and went to pimco as an economic counselor he wanted to write think and speak macro. paul mcculley stepping aside. pimco saying they respect that decision. it seems to be somewhat disappointed due to that.

shakeup in the management when it comes to citigroup. manuel medina who is currently copresident of citigroup does say he will retire on june 1. he is been copresident since 2013. he comes from the global consumer banking division where he was ceo. he is been in his current position for about two years and he will retire in june 1. manuel medina-mora. betty: with pimco over the last 12 months, a lot of moving parts. paul mcculley stepping down. on the heels of president obama's white house summit to counter extremism the u.s. military has telegraphed a timeframe in details of an operation to retake iraq's second-largest city. extremists took over mosul last june as the group marched across iraq and syria. this offensive will involve up to 25,000 iraqi troops trained

by u.s. advisers. i want to bring in peter cook. military leaders do not often give out any details before an operation. why is this different? >> this is highly unusual. not the normal protocol for the pentagon. this was a briefing by a military official from u.s. for command which oversees iraq and that part of the world for the u.s. military. one reason is to give an indication that the iraqis are ready to take the offensive against the islamic state and put pressure on the iraqis to deliver. second of all, to send a message to the islamic state. those troops -- forces that are in most all right now. trouble is coming. psychological warfare to some extent. betty: how soon could this begin? >> they are talking about april or may. they also suggested things could slide if the training has not matched up with their schedule.

it is in play but they are talking about spring. we are debating the authorization for the use of military force in congress now. betty: it seems like americans are more acceptable to this now. >> the polls suggest that but we are not talking about u.s. ground troops. we're talking about advisers perhaps air support by the united states. adjustable support and maybe -- logistical support and maybe u.s. spotters to locate airstrikes. betty: congress was on break this week so they return next week. what will be high on the agenda? >> you have janet yellen taking her trip to the hill to testify on monetary policy. she will be in front of the senate banking committee. the first time she is based this committee with republicans in control. big moment for her to talk about when lift off for interest rates will happen. the regulatory discussion and the governance discussion.

those things will come up during the hearing. big fcc meeting next week on net neutrality. a few other things as well. betty: you will be busy. peter cook our chief washington cosponsored -- correspondent. it covers go too far with dodd-frank? a lot of small banks may be feeling the pain. we debate that in a moment. if you cannot afford to own, you can rent. what if you cannot afford to rent either? and mom and dad want to kick you out? we ask spencer rascoff next. ♪

betty: it is 15 minutes past the hour. american and british spy agencies hack into the world's a gift sink card provider stealing encryption codes. that is according to a new website -- a news website,

intercept. a dutch company that was targeted produces some 2 billion sim cards a year. lenovo has its own hacking problem. the company has apologized after it was found that it's preinstalled software could lead customers vulnerable to hack attacks. lenovo says it was a mistake to include the software and is helping customers remove them. it may be cold in new york, but look at this. that is jerusalem underneath all that snow. a snowstorm shut down public transport in the capital and close roads leading in and out of the city. snow in a desert. that is the latest world news. another update at 45 minutes past the hour. it has been a busy week for spencer rascoff. it all began last friday with an earnings report that showed zillow's fourth-quarter revenue

up 58%. by wednesday, his company announced the completed acquisition of trulia. the same day, he was off to san francisco for his first ever all hands meeting at truly upon headquarters. a quick selfie before speaking to a sales team in denver. spencer ref -- spencer rascoff joins us. by the way, when you are on social media, we see you everywhere. now we can spy on you. no were spencer rascoff is. -- know where spencer rascoff is. how would you integrate both trulia and zillow? they are very different companies. spencer: they will be different brands but it is one coming behind the scenes.

to the consumer, these will be different brands. will have different products and web designs. behind the scenes, the listing inventory and ad sales team will present a unified face to the industry. that will allow advertisers to reach audiences at unprecedented scale. they have never been able to reach this large a scale. betty: i have been on both sites and they offer slightly different information. why not combine the two of them together? spencer: wherever people are looking for information, we want to have lots of brands on the shelves. whether it is in the google search results or an iphone app store or in the media, we want zillow and trulia to a different brands. betty: is it because the users are currently brand loyal? spencer: this is a strategy that viacom pursues with vh1, and the

tv -- mtv. betty: you are targeting one market. spencer: different people have brand choices and preferences. especially with something as important as home shopping. it is too important a purchase process to focus on one site. betty: i get this question asked to me all the time when i'm about to interview you. i ask you this before. homeowners are always on your site and they want to find out what the value of their house is. why are they sometimes so inaccurate? is it going to get more accurate with something like this? spencer: the estimate values every country home in the country every night. we have gotten more accurate over the last nine years since we launched. nationwide, our error is now around 8%. the error rate keeps coming down but holmes are unique and our computers have never been inside your homes.

it will always be a starting point. you should work with an appraiser to figure out what home is worth accurately. betty: where do you want to get that? where you think you can get it to? spencer: it is a hard math problem. i think we can get better. with more data and information from users we can get more accurate. around 90 million people uses a low every month and that helps improve the accuracy of the data. betty: there is a report that you put out about the rental market in the u.s. the report -- we have a map of other cities second-tier cities, denver, kansas city, nashville, charlotte, where rents are going up higher than the national average. is that going to be a lid on the

home market? spencer: the rental housing stock has not been able to adjust quickly enough to all of these new renters. in the peak of the real estate market in 2008, almost 70% of americans own their own home. now 63% on their own homes. all of a sudden another 5 million people that are renting who used to own. nobody built buildings for them during that downturn. it takes couple years to go to the structure process. too many renters and not enough rental units. rents are going up all over the country. the average american renter is now giving 30% of their income toward rent. historically, it is been 25%. unfortunately, that means renting is becoming a barrier to owning because -- betty: you cannot save the money. spencer: we need developers to build buildings. betty: thank you so much for joining us.

spencer rascoff. we will be back in a few moments. ♪

betty: you are watching "in the loop." good morning. i'm betty liu. sysco ceo says no one in their right mind would want to break up his company. the stock has room to run and chambers said he is never spoken with an activist investor. >> many of the things other companies would be criticized on, we have done ourselves. that is a nice way of saying we are pleased with where we are in the market. we will become the number one i.t. company. shareholders know we have a good chance of doing that. betty: chambers has said he will retire by the end of fiscal the

fiscal year. interdealer brokers handle large trades between banks. the spanish bank has reached a settlement with new york state over the ways it screens applicants for new accounts. there been complaints that their currents -- santander's current screening process. dodd-frank is crushing smaller banks. the findings show that unity banks have lost market share at twice the rate they had before the law took effect. small business lending down 11%. shared assess -- assets down 19%. is dodd-frank really working? on one side of the debate is

bill cohan who says it is fine that smaller banks are suffering and he hates dodd-frank. on the other side is dennis kelleher, the ceo of better markets. dennis, i was surprised by this. you hate the study? dennis: hate is a strong word. good morning to you and bill. it is misleading to say it is a harvard study. is a study by a former j.p. morgan chase executive that happens to be a consultant for a company in boston and did this paper through a harvard affiliated organization. harvard's claims association with it on the front page of the paper. i look at it and it reminds me of the book "how to lie with statistics." is more fiction than fact. it says that the crisis ended on march 1 of 2010 and everything

that happened afterward is due to the dodd-frank law. it ignores the fact that the bill was not passed until july of 2010. almost none of the rules were finalized in 2011. today, less than half of the rules have been finalized and less than 40% of them have become effective. almost all of which -- betty: your point of why you dislike the study and what they're finding is on smaller banks is what? you simply don't like the source? dennis: it is not supported by the facts. everything that happens after march 1 of 2010, this author says is due to dog frank. -- dodd-frank. the author ignores the crash of two dozen eight, the worst crash since 1929. the worst economy since the great depression. it killed small business in this country. betty: the trend of smaller

banks during smaller -- this is a decade old trend. this is not just after -- it is not even right after the financial crisis. dennis, hang on. i want to give bill some room. what do you think about the study? bill: i am not an expert on the study. i have never liked dodd-frank. maybe dennis and i can agree. i find that dodd-frank is 2500 pages of gobbledygook that does not address the main problems that caused the financial crisis in 2008. not only the 2008 crisis, but the recurring problem of excess in our banks where people are rewarded to take the risks with other people's money. dodd-frank has nothing to do with that. once upon a time, this was a nation where if you were in business and you made right business decisions, you

succeeded and if you made poor business decisions, you and out of business. that is the natural order of things. betty: you are saying let the small banks fail? bill: maybe banks should not have been saved in 2008. i have always small. i have always said frankly lately, that we should have let bear stearns fail in 2000 eight, not force it into the hands of j.p. morgan chase. that would have sent a powerful message which did not get across to the rest of wall street that this was a problem. instead, we thought they saved bear stearns, everything will be fine. let the free markets work. whatever happened to free market capitalism? i find it ironic that republicans abandoned free-market capitalism to save the thanks. betty: on dodd frank, the american action for them came out with the study yesterday came out -- on dodd frank, the american action forum came out

with the study about the costs and what we have gotten in return for the cost of the regulation. $39.2 billion in total costs. 63.7 million hours of paperwork dennis, because of all of the regulation, and what have we got for it? dennis: first of all, i respect bill a lot and he makes some good points. importantly, the biggest point is that the existence of too big to fail banks on wall street is a violation of every principle of free market capitalism. every day they exist is an affront to everybody who believes in the free enterprise system, and it should be ended. as to this study by the former j.p. morgan chase executive, and the other study by basically a group that is funded largely by wall street both of these are

largely fiction and they are part of a series of reports that come out all the time by the big banks and their allies attacking financial reform and making these outrageous claims that have no basis. you want to talk about the cost of regulation, but nobody wants to take -- to talk about the cost of the crisis. the cost of the crisis will cost this country something in the neighborhood of $15 trillion. betty: where do you come up with that number? dennis: we did a study that shows it will be more than $12.8 trillion. anybody can look at that study. the gao did a study, the dallas fed did a study. when you look at lost gdp, betty liu, you are talking about trillions of dollars. in january of 2010, 30 days before the latest paper says the crisis was over, january of 2010, and the underemployment rate and unemployment rate in this country was 18%, more than 40 million americans. today there are more than 10

million homes underwater. the cost of the crisis is what we are trying to prevent. the cost of regulation to prevent a much bigger crisis and those bigger costs are necessarily going to cost more money. bill: i agree with a lot of what dennis is saying. we need to fix the incentive system on wall street. we need to fix what we reward people to do all day on wall street. dennis: absolutely right. bill: they will continue to do what they are rewarded to do. dennis: i agree with bill completely. he is absolutely right. if we do not fix the incentive structure, which tends to high risk trading, which threatens high risk losses and threatens the financial system in bailouts, he is right. bill: by the way, it is not only trading, it investment bankers

which encourages banks to -- we get into this yield thing. betty: where is that in. frank right? -- where is that in dodd frank right? dennis: no law in this country is perfect. but what he tries to do and has largely been prevented from doing because of the lobbyists and lawyers from wall street, is it limited reduce the highest risk activity, and it is supposed to get at the incentive structure. those rules have not even been finalized because of the lobbying of wall street. it does try to reduce the high risk activities by requiring more capital, a limiting proprietary trading. by lowering leverage, by having liquidity, by having living wills. there is a providing of -- a propriety of revisions of the law of moving high risk

activities, moving them outside the bank. but the lobbyists and lawyers of the too big to fail banks -- betty: there are 47 rules on dodd frank 15.6 million hours of paperwork. dennis: bill earlier said he is not an expert on the studies. i am third i have read them and look at the support material. they do not support it. they are all based on anecdotal evidence. betty: i just do not think you like where the numbers are coming from. dennis: it is not that i do not like the studies. the studies would not pass ap or-review -- a p or-review process. it was not passed until july

2010, and that tells you pretty much where someone is coming from. we began the show talking about the solutions, the supposed solutions that are offered. they are right out of wall street's wish list. it would do the opposite of what bill says needs to be done. betty: dennis, we need to get going. thank you so much, dennis kelleher. and thank you to bill cohan as well. we will be back in a few moments on "in the loop." ♪

betty: we have less than an hour until the start of trade this friday morning. keep an i on movers including sanofis. alex: the new chief executive officer of senate office -- of sanofi. lost market share there.

the last ceo expired five months ago, so the hope of course is that with his grand experience at bayer will provide stability. citigroup only down a little bit. because resident -- the co-resident will retire, but he will remain the chairman of the thanks mexico unit. a successor of the copresident role will be made in the near future. ceo michael corvette's pay last year was cut by 9%. he still made $13.2 million. citigroup was the worst performer among all big banks, profits falling around 47%. quickly, i want to talk about john deere. looking for a 17% drop in equipment sales for 2015. it is a double lamb he here. corn prices as well. a tightening global economy,

getting it good jordy -- a majority of its revenue from the u.s.. betty: it looks like the kids will be all right. new research shows america's millennial generation regaining economic power more than five years after the end of the recession. for america's young adults employment is up wages are higher and they may finally be moving out of mom and dad's easement, possibly moving out of their own homes that possibly owning their own homes. we have been crunching the numbers on this. victoria, what is the most surprising that you have found here about the millennial generation and the workplace? victoria: what is surprising is that wages are rising for millennials to counteract the bad news narrative we have been hurrying about them -- we have been hearing about them. they look at the four quarter moving average of weekly

earnings, and they found that for 16 to 24-year-olds, wages were 4.8% in the fourth quarter than the year before, faster than any other age group. the second fastest earners were also millennials. that is a really good sign. betty: is that a good sign for the overall labor market? victoria: it seems like there may be a little bit of a canary in the coal mine. we also saw this pattern in the previous expansion. we got a nice pop in earnings through younger workers, and that preceded faster pickup in wages for older workers as well. so if we get this rising wage growth, it has been the missing link in the economy. everyone from fed officials to regular workers are worried about. if we can see this improvement, that would put us on a sure footing. betty: how might we feel this and the broader economy?

where will they be putting this after money that they seem to now be earning? victoria: unfortunately, a lot of it will have to be put towards student loans. we know that about 40% of households with -- headed by an adult younger than 40 has student debt. at least some of that income will have to be appropriated toward paying down that debt. but we are also seeing signs that they are forming households and they are moving out of probably mom and dad's basement and they are going into rental units, it looks like. no real change. in fact, the homeownership rate dropped in the fourth quarter. they are not becoming homeowners just yet, but as we know, baby steps. we will get them into rentals, and hopefully if the economic growth we have seen in 2014 continues, then they can get there. betty: they can get to owning a

home. victoria, thank you so much. much more ahead. it is hard to get young people to watch an entire game of baseball. how the mlb is taking care of that issue, as spring training is nearly in full swing. ♪

betty: let's take a look at world headlines. the leaders of france and germany are taking questions at a news conference in paris. they say the ukraine cease-fire that they brokered last week has been breached several times. this is a live shot of the press conference right now. fighting has persisted in ukraine. pro-russian rebels continue to attack ukrainian positions overnight with shelling and artillery of -- with shelling and artillery fire. multiple bomb attacks in an eastern town.

three bombs exploded targeting the homes of a politician, a police station, and a gas station. 30 people are thought to have been injured. the state department is trying to remove hackers from an e-mail system. three month after it was breached, according to people familiar with the investigation. it is not clear how much data the hackers have taken, but the up or to have only gained access to unclassified e-mails. that is the latest world news. more in the next hour. shifting to sports -- baseball fans rejoice. the 2015 season is nearly here as pitchers and catchers have rooting on -- have begun reported to spring training. who better to check in with van cc sabathia? a cy young winner. i spoke with him at the launch of derek jeter's website to get his take on a-rod's apology pete rose, and the appeal of writing for derek jeter. watch this. >> i thought it was a great idea

to be able to have my own voice and i saw the other pieces that guys were doing and it looked interesting. i am excited to be a part of it. betty: have you wanted to have a platform to talk but issues and things that were on your mind? >> of course. just every day stuff. having that platform and that voice now, hopefully it will get fans and people some insight into my life. betty: i'm sure many fans do want that inside. you are in the prices of writing one article. what is it going to be about? cc sabathia: it is about being a sports fan. i am a huge sports fan. i understand when you scream at me on your tv because ice cream the same way. my piece is about -- me and my son our relationship, we fly around the country and go to college football games and basketball games. it will be a fun piece. any co if you were not playing baseball, what would you be playing?

cc sabathia: i think basketball. i love who. i do not think i could have made it to the nba. betty: a-rod recently apologized to management for doping. do you think he should apologize to the team? cc sabathia: i am sure he will. that is up to him, but being in a clubhouse and the fraternity of the brothers, it is always appropriate. we will have to wait and see if it happens. betty: do you think he should apologize to certain players? cc sabathia: not at all. he did the crime, served his time, and he can get back to us and start reducing. betty: do you think he has tainted the game of baseball? cc sabathia: you cannot just put it all on one guy. he is the guy now because he is the last one to get caught but it is a bigger issue.

betty: the game is bigger than him. so rod manford, it is his first game as commissioner. what are the issues on the radar for him? cc sabathia: the replay, if we can suspend -- if we can expand it a little bit. and game times. playing with the yankees and with the boston game in 4.5 hours, hopefully you can come up with a solution. to do something about that. we will see. betty: because baseball has a problem. american baseball has a problem capturing the fans' attention and bringing in younger fans because the game is so long. cc sabathia: it is. we have some great athletes, and we want to make sure that people get a chance to see that. hopefully we can do something about that. betty: do you think pete rose should be reinstated? cc sabathia: just my personal

opinion, i do. i am at pete gross fan. here is a guy who is -- i am a pete rose fan. here's a guy who is a great player, and you have to respect how he played the game and how hard he played the game. betty: so you think he served his time. should he be in the hall of fame ? cc sabathia: i do, yes. betty: before we go, i want to ask you -- i am, by the way -- as fame you can tell, i do not play a lot of baseball. but can you teach me how exactly you hold the ball and what pitch are you going to teach me? cc sabathia: i will show you a fastball. you put the two seems, these two fingers on the seems. you put these two fingers here, but the thumb on that sameeam down here.

betty: that's it? and how do you throw it? cc sabathia: that is a good throw there. betty: i will never make the cut. we will be back in two minutes on "in the loop." ♪

betty: today's big number is 122,500. that is how much the winning bidder will pay for warren buffett's cadillac dts. he autographed the dashboard and has offered to personally hand over the keys. the proceeds will go to a charity for girls in omaha, his hometown. i wrote in that very same cadillac a few years ago. the buyer is getting a nice ride. i can attest to that. warren buffett keeps his cars in immaculate condition and is a pretty good driver. staying on autos, jeffrey gerlach says why buy a car when

you can uber. ♪

betty: welcome back to "in the loop." we are 30 minutes away from opening bell. stocks will be slightly lower the s&p not far off its all-time record. in greece, creditors are cranking up the pressure. requests to suspend -- to extend financial support. germany and its allies are letting to -- are willing to let greece -- sanofi -- bolivia grand accord comes to sanofi from bayer.

the u.s. accounts for one third of sanofi sales. most of the new drugs will be introduced here in the u.s. first. the largest maker of farm equipment john deere, will be hurt by lower crop prices. the pentagon plans a spring offensive to retake iraq's second-largest city from isis. the city of mosul. u.s. advisors will have to train iraqi soldiers. we are 30 minutes away from the start of trading. i want to count you down, the top 10 headlines hitting you before the bell. good morning. number 10 -- youtube looking for new ways to expand its audience.

now creating a service designed for children. the coming plans to launch the youtube kids app featuring a partnership with dreamworks, national geographic, and the jim henson company. brendan: why are you looking at me when we are talking about youtube targeting? i am not going to talk about my kids. betty: brendan is the dad with 11 kids trying to figure it out. brendan: i will talk about revenue. google has been looking for ways to make money off youtube. they have a real problem turning this popularity into actual dollars. one of the things they have been doing is creating predictably good and safe content they can advertise. this is a smart play. mark cuban has been bearish on youtube forever. betty: he hates them. and at the same time you can get more from the video product then

you can from google search. they are looking for places to expand their video content to attract more advertises. -- their advertisers. betty: he hates them because he is better. if you are looking to sell the $1.6 billion company is already in talks with at least two buyout firms. leslie: this comes on the heels of two of the biggest investors last august that say it is undervalued, and taylor -- ann taylor. there are all sorts of movements going on among these discounted retailers. betty: do two mediocre brands make a bank out brand? no.

brendan: what is mediocre about ann taylor? they have a stake in sales and eddie bauer. you saw the collapse of radioshack. there were some bad moves. there was also real estate involved. you cannot just fix the company, you have to fix the malls of america. number eight, nordstrom, the largest u.s. luxury department store, posted fourth-quarter earnings. they trailed wall street as the company continues to cut prices and inventory, hurting their margin. they bought trump plaza and they are trying to expand their saline. leslie: it seems like nordstrom has been more successful online. north nordstrom and the nordstromrack.com brands have

surged. while they are struggling in terms of getting people to shop at the higher-end stores, they have not been successful where other stores such as ann have been successful. brendan: i also think when we look at the retail this last holiday season a lot of retailers were discounting earlier and deeper. so anybody surviving reasonably well in that environment you can almost call it a success. betty: the pressure is on for target and other retailers to increase minimum wages for employees after walmart's landmark decision which came during their earnings report. they just sort of snuck in there, raising wages to nine dollars per hour to a living wage. brendan: we were trying to

figure out on "surveillance" this morning -- are they vowing -- are they bowing to political pressure, or is this wage pressure? there has been a lot of political pressure on walmart for a long time. they feel like they do not have a choice. if they want to retain workers, they have to do this. leslie: not to mention, there are all sorts of discussions on the level to raise minimum wage. so is this walmart getting out ahead of the ultimate requirement for them to do so anyway, based on legislations to come in the future? betty: speaking of the labor market, millennial's are finally starting to see their wages perked up after years of stagnation. maybe there is wage pressure that is finally building up, and walmart is answering to that. the fight for the road heats up as apple reveals plans for an electric car. they are pushing an introduction as early as 2020, setting the stage for a battle with tesla, gm ford, and others.

they all want to build electric cars, but do we want to buy electric cars? brendan: i am more fascinated with how the silicon valley is rotating into the same maelstrom, where everybody is headed in the same direction. google and apple have turned to similar products mapping, which then turned into mapping going into cars. i would not have predicted this five years ago which -- but this is all the same business. it is fascinating to me. leslie: and to keep you where you are. i walked into a verizon store last weekend and i said there is a new samsung phone coming out, can i use apple? they said is your ecosystem apple? if they have a car that expands the ecosystem, it makes it harder for you to switch. brendan: the former gm ceo said

yesterday, you want to make cars good luck to you. betty: we are giving tim cook some ideas. coming up we will discuss the road ahead for the auto industry, and why one billionaire things that future is bleak for anybody who wants to get into cars. ♪

betty: we continue the countdown to the opening bell. number five, a bold call on the auto industry. vehicle sales may be hot. just a lot -- jeff dunlop says that frankly the -- jeff gun lock --

how did jeff gundl come to the conclusionach, a bond guru now -- >> he makes these bold calls. he kind of was like an oracle in this way. he has these wide-ranging observations about the world. in this one, he arrived at this conclusion because he spoke at a conference in florida in november, and they arranged a car service for him. he is on his phone doing work. wait, this is great, why didn't i think of this sooner? he has cars parked in his garage maybe as a collector thing, but he says people will increasingly change their behavior, and not just billionaires. he thinks that will end up growing and growing such that you see displacement of personal vehicles. betty: i think part of his argument is that it is very myopic.

l.a., new york, urban areas sort of outlook on the auto industry, on the auto market. did he say that he thinks automobiles are going to go the way of -- that they are going to disappear? mary: i think he thinks it is on balance that it will be a marginal change, that ford and gm will be hurt in the long term but he does not think it will be the end of the car era. you are going to want your uber or some sort of regular transportation, but there will be a changing usage. betty: how does another call pan out outside of bonds? mary co. -- mary: in 2012 he made a call where he just thought that apple was way too bank overvalued, the stock of apple, and he recommended that investors short it. that ended up being at the tipping point when apple went down. by contrast, you have a chipotle

call last year which he did not get the whole idea of a giant burrito for $12. it is a reasonable line of thinking, and the stock has doubled since then. some of them are theoretical and emotional calls that make a lot of sense. that eco-as he make money behind those calls, -- that eco--- betty: does he make money behind those calls the echo mary: their equity fund holds twitter and other stocks that he has had calls before and against in the past. it is a little bit broad and long-term call instead of a do this tomorrow. betty: there was another piece of news that you have been writing about. pimco, paul macauley, stepping down. mary: i don't think it was that big of a surprise. people were watching bill gross when he left.

everyone knew at a certain point that paul was going out the door as well. paul said 100 days a year, i understand it was a pretty cushy job and he did not have to deliver very much. he flew around the world making these great calls and conferences and giving speeches and being the face of pimco. it was kind of a cushy deal. betty: without a whole lot of responsibility? mary: it is not a surprise, but it is a big deal for the firm. betty: how will they fill that hole? mary: it is a good question. does high does a good job getting up there and talking to clients and investors. dan isaacson does a good job but he does not want to be in the spotlight the same way. betty: any sense that paul mcculley will join growth --

join gross at janisus? mary: i would be surprised if he did because they are trying to build up the investment side of it and it is less of a macro, a giant ship going in one direction or the other in the way pimco was. betty: and they probably do not need somebody. bill gross is giving the message of where he is going in his outlook. mary, great to see you. mary childs of bloomberg news much more ahead. another blow for american express. this time it happened in court. wall street cuts back on big banks and slashes payrolls for the first time in five years. we tell you how much. ♪

betty: let's take a look at global markets. further uncertainty about the future of greece. the finance ministers are meeting in brussels to hammer out a bailout proposal. the greek government remains optimistic and eu officials said in the last hour that by the deal by tonight is unlikely. the leaders of france and germany had just reasserted their commitment to greece remaining in the eurozone dispelling earlier reports that germany was ready to allow the exit. let's get back to bringing you the most important stories you need to know before the bell. brendan greeley joins me this morning. let's continue with number four. not a good week -- american express cannot catch a break. a federal judge ruled that they

violated antitrust laws by asking customers to use one credit card over another. this is the latest major blow after they ended their partnership with costco and jetblue. what is going on? leslie: our worst performer on the dow. they say they will appeal the decision, but that could take over a year. amex, their whole business model is surrounded by this pricing power they have with merchants. betty: exclusivity. leslie: it could be a big blow to amex's business. brendan: this is bad for consumers because it reduces choice. i cannot figure out -- i think it is a wash for consumers. on the one hand it is true that you want more competition and your merchants being able to decide on their own what they will suggest to you. on the other hand, the other issue is, do you rely on the rollover a debt -- on the

rollover of debt? i think it is kind of a wash as far as the rest of us are concerned are in betty: number three, oil is headed for its first weekly decline in a month as u.s. crews stockpiled to expand a record. prices will continue to remain volatile and his pattern will continue over the upcoming weeks. who does not think oil will remain volatile, right? brendan: i think that is the best tradition you can make. people have been coming in week after week and making surveillance. they are always wrong and we are always wrong. i just learned for the first time that if you want to invest capital in fracking oil, it takes 28 days of investment to turning the tap on. stockpiles mean less -- make less of a difference, right? that is amazing. that means whatever the price of oil does, it will have a hard time recovering to where it was before. even then, i just made a prediction that i am going to be wrong.

leslie: the real benefactors of a high-frequency traders who are capitalizing for review see tremendous profits coming into these guys as they capitalize on the volatility with not just oil, but the fx market. betty: that is why this is really difficult to predict what it means in terms of job losses who will go out of business. there are thousands and thousands of these fractures and they are not just here -- they are not just in the shale region, they are in alaska and other parts of the country. number two, more wall street woes. a study shows that among bankers and traders, staffing has been falling for four consecutive years. anybody surprised by that? leslie: i look at this and i see we can blame regulation, we can blame the various cost-cutting measures. but as part of my daily job as

reporting on the markets, a lot of investment banks say acquisition is difficult these days. they cannot pay as competitively as they used to. wall street does not have the same glamour as it did in the 1980's. it is a hard, difficult place where you risk losing your job. brendan: if you want to have an exciting life, that is just as important. the idea of what is cool has shifted all the way west. i agree. betty: exactly. leslie: you are still going to work long, crazy hours and be on the road a lot. the life of a banker is not what it used to be. betty: it is "wolf of wall street take ii," where the will just eat you alive. brendan: if "the wolf of wall street" remain about this, it would be the most boring movie

ever. betty: equity futures are slightly lower this morning. our top story in the opening bell is next. ♪

betty: welcome back to "in the loop" bringing you the most important stories you need to know before the bell. brendan greeley and leslie pickard joining me this morning. janet yellen testifies before congress next week. coming back from the break. janet yellen is expected to elaborate on the fed's latest guidance to be patients on a rate hike. brendan: one of the things we were just talking about, the possibility of wage pressures. walmart and a couple of other places starbucks, but i think the other part of the puzzle is productivity and whether we are

going to see productivity growth or not. there are two camps on this. robert gordon says that indoor plumbing is far more important for productivity than i.t. ever will be. we have seen all the big gains in productivity that we are going to see. larry summers has also signed on to this as well. the other camp says internal optimism, we will figure something out and it will make us more productive. there is no evidence of that yet. just the hope that since it has always happened it probably always will. leslie: how can you ignore the fact that all these new inventions and innovations, it has never been a better time then perhaps 15 years ago, a couple decades ago for productivity improvement devices? brendan: i would agree. the problem is it has not shown up in the data yet. you are an optimist. leslie picker is an optimist. betty: as markets you ready to start trading, barbara ryan hot

-- barbara ryan hart -- barbara reinhardt does see the fed raising rates. the federal reserve has spent a tremendous amount of time and effort and credibility getting the markets ready for an eventual rate hike. it started last year with kind of winding down quantitative easing. it may be june, it could be september. the bottom line is the fed will end up raising rates this year. betty: so raising rates by 25 points. last year the rates and the yields went down. will yields go up when we raise rates? leslie:>> now that we are seeing a turn in the data in europe it does herald a swing of the data in europe getting less bad. it does not necessarily have to be very good to get rates to come off their hyper emergency

lows, but we do think that is what was covering that what was governing the global rate market last year. it was coincidental timing. brendan: what are the you see wage pressures? do you see wage pressures starting here? barbara: i do think this is the long-awaited build of wage pressures. there still are a number of u.s. citizens that would like to work that are currently not working, so we have to be mindful of that. but we do think that walmart will have an effect on other companies like costco and potentially target. betty: you also say fears have potentially dissipated in the market. that is no longer a risk? barbara: whenever you have quantitative agency -- quantitative easing out of europe and japan, that's hearts back to deflation. the ecb message to the markets last month was so much beyond

what expectations were that it had taken some of those -- betty: what was so beyond about it? barbara: the size of the program was bigger than what the markets had expected. everyone was expecting between 750 billion euros and 800 billion. brendan: everybody is furiously deflating as the dollar rises. are you worried about exports? barbara: not necessarily. we went through a decade of dollar weakness that bottomed in about 2010. so this kind of countertrend rally that we have seen in the dollar we think is going to be sustainable over the next couple of years because of the differential you will see in central-bank policy. it is not necessarily a bad thing because it is coming off a low basis. betty: i love reading some of the surveys that you do. you do a lot of surveys of your clients.

tell me the latest. what are your clients telling you about where they will park their money and where they see the u.s. economy. barbara: we are seeing more clients park money in europe. after massive outflows european fund managers over the course of last year we finally are starting to see money flowing back into europe. we have long been positive on europe, and we start to see that playing out this year. we think european equities will get a lot of attention from investors. we had a lot of strain -- a lot of strength coming into the fourth quarter of last year and you may start to see that level off a bit from here. but we do think it will be a benign slowdown that has the potential to accelerate in part because you had a big decline in crude oil prices and the 22% decline you saw in gas prices over the past quarter. brendan: when you say europe, do you mean germany or the periphery?

barbara: we are talking about europe in general. germany has a strong case. when you see the eye so index -- the iso index bottom on average you see the gain of european equities up 20% over the next 12 months. and the 5% that you have seen your up over the start of this year, we think that is building toward that momentum. betty: do they see stocks rising this year as much as last year by double digits? for u.s. stocks. barbara: u.s. stocks will be capped because valuations are more expensive since we came off the bottom in 2009. but we do think there is potential. there has been a 15-year downtrend that in the g 5, bombs have been -- bonds have been trending.

leslie: you see oil that will be at the bottom. barbara: it has been beaten down. the way you want to think about oil is twofold. when you have these dramatic, cataclysmic falls you have the potential to see a bottom, a rally off the bottom, and potentially retesting. so we think in terms of energy it may be a little too early in terms of the risk reward that over the next two years, energynow! will not be a bad thing. betty: thanks to brendan greeley and leslie picker. we are going to be all over the markets for you on this friday morning. is it too early for noodles? wide noodles and company is selling off.

and the prediction that the oil supply will fall this year. is that right? stay "in the loop." ♪

betty: as finance ministers are

meeting in europe, trading is just getting underway in new york. we get back to alix steel for a look at early movers. alix: we want to look at the 10 year yield. taking a relatively big earlier this morning. the multis finance minister is saying the german led block, the yield is continuing to its downside, picking up a little bit of steam. investors rotating into that safe haven. there are some stocks worth mentioning. you have noodles and company seeing its worst intraday loss ever. actually, now it is up by five points. premarket, it was down quite a bit, and also rocket fuel seems to be higher. i think that trend is not right, actually. we are having earnings issues with them. trust me, they had some earnings issues and weak outlook.

let's get on to some -- i do think we have been correct now. here we go. like i said, noodles seeing its worst decline ever. off by 27%. basically it was 2015 earnings growth. downgraded across the board. same story for rocket fuel. downgraded this morning, all about the outlook and limited visibility on forecast. that company provides artificial intelligence digital advertising services. they say it is a new market, it is evolving. therefore that limited visibility. let's check out some stocks that will be moving up perhaps -- moving perhaps on analyst calls. a race to buy versus hold saying they expect women's footwear to do well. that is dsw. also walmart making headlines raising minimum wage for workers, but they will have to

spend money to do that. the new chairman of its will offset higher expenses. stocks are getting hurt a little bit this money. wrapping it up this morning with and the -- with abbv. ie drivers will be strong growth for the best-selling him era drug. an upgrade there. betty: thanks so much. noodles down 27%. production falling, according to the biggest oil company. drilling has been reduced by almost half. this is from a company that has been growing their outlook at 50% per year u.s. oil, since 2009. eog is cutting back.

the u.s. administration says production will grow at almost 8% this year or so who is right here on u.s. oil production? hopefully to settle this is bloomberg oil and gas reporter brad olson from houston. where do we get these two the version? who is right here? brad: i think it depends on which follow the eog's of the world and which continue to pump. will it become is like eog, that will stop drilling and put on the brakes, or will there be a lot of companies that keep going and try to keep coming -- to keep pumping and try to survive at minimal margins. betty: that is a great point. eog is a market leader. if they would cut production -- not cut production, but wouldn't others have to follow suit? brad: that is the big thing.

the ones that are continuing to grow production, hedges are keeping them producing. they have locked in prices at higher rates than last year, and that allows them to keep going. but come is like eog that have not hedge a lot of their production have been able to stop production and wait for the price to come back up. they say there is no reason to pump with prices being this low and to take margins being this low. the big question mark is what will happen with all the rest of producers? there are almost 8000 companies that pump for oil in the u.s. and 8000 company do not always march in lockstep. betty: and they are not all in the same area. brad: that's right. there are different techniques for doing drilling. some of them drill always oddly, some do vertical drilling in many different areas of the united states.

it does not really compare very well to opec, which we know is only 12 countries. it is difficult for opec to work together. imagine how much harder it is for 8000 u.s. producers to work together. betty: where does the oversupply come from? is it out of opec or is it out of the u.s.? brad: in the beginning it was out of the u.s. a lot of production came out of the united states because of shale production. production out of iraq, it took many years for that to happen. and there was a civil war in libya. so production was offline there, and those things came online again as shale continued to grow. that is why you have this big glut that continues to exist in the market. betty: bradley olson from houston. thank you. u.s. manufacturing pmi is out. alix steel has more. alix: coming in higher than

estimated at 54.3. estimates were for 53.6. this is different from the isn that we get that has been around for a very long time. the market data is relatively new, and according to michael mckee, it does not move markets very much. that said, it is over 50 over the expansionary number, and it is coming in higher than the survey estimated and higher than january. january was just at about 54. this one was coming in at 50 43. we have seen a turn upwards in this reading in december after months of decline. betty: thank you so much, alix steel, on those pmi numbers. cisco ceo don chambers speaks out on asset investing. ♪

betty: even with shares of cisco

near a seven-year high, the ceo, john chambers, says the stock still has room to run. he shot down -- he sat down with erik schatzker yesterday. erik schatzker is joining me. he says he talked to know activist investors? erik: it is important to consider because chambers wants the world to believe that cisco is in as good a position today to take advantage of what he calls the digital era as it was in the mid-1990's when he became ceo to take advantage of what he describes as the information age under bill clinton. he is bullish could not be more bullish, and he has a couple of good quarters under his belt. it has been a rough ride for cisco in the post crisis, but things are beginning to improve. i could recite john chambers' sales pitch at length but i am

not going to because his stuff on activism, frankly, is more interesting. the reason i brought up activism with him is not because i know something. if cisco was having conversations with activists, i do not know about them. but i want to know from john chambers if he is because if carl icahn can talk to tim cook, then presumably he or any other activist could, if he wanted to talk to john chambers. the fact that cisco has a market cap does not mean it is off-limits to activists. john chambers says he and the company like cisco and other companies, what they need to do about activism. >> many of the things that other companies have been criticized on, we have done ourselves. that is a nice way of saying that we have been an activist and we are going to lead it and become the number one i.t. company. we have a good chance of doing that. betty: did he just say we are our own activist? erik: i said, what does that

mean, does that mean staying one step ahead of the activists? he said not exactly, he said it means staying a step ahead of shareholders and making sure -- in the case of cisco, no one shareholder owns more than 6% of the stock. that is blackrock, which is by nature not activist. there are other investment firms in there, but no activist has a specific position. when i asked him about activism, he got a bit touchy. john chambers does not often get that way. he said, no i am not going to answer that question again. no. betty: do you have any oscar picks this weekend? erik: i want to say "grand budapest hotel" i want that to win. it touched something inside. betty: we will be talking about that with bob wright and mike

dolan. have a great weekend. ♪

>> it is 56 passing the hour. i am alix steel. a quick check in on stock trading. the dow is off by about 90 points, the s&p off by 10, the nasdaq off by 12. keep in mind we have seen stocks this week trend beyond record

levels. we are waiting for the region's finance ministers to meet in brussels. the 10 year yield falling to 2.05. it is etf friday. we pose the question today, can hedge fund managers ever be replaced by etf's? more and more etf's are popping up, mimicking headphones -- hedge fund strategies. how does that even work? how do we create an etf like that? >> it is a small but growing area. the liquid comes from the fact that unlike hedge funds, which have lockup periods and retention schedules, you can get out whenever you want because they are liquid. these are mimicking complex strategies, such as long short managed futures, and they are doing it because people like return streams that are not correlated to stocks and bonds. this is something that with the

advent of a lot of regression analysis is possible. hedge fund strategies are not rocket science. a lot of the etf's can go out and act like hedge funds. there always might be the one hedge fund manager that will tell us, but for the most part they do what they do at the fraction of a cost. -- at a fraction of the cost. these come along and they have no minimum investment. goldman sees this area going up to $2 trillion in the next two years because institutions have about 20% allocated toward alternatives. as the stock market sort of is ending the bull run, volatility is coming back, if you look at this year, the risk of adjusted returns of this etf -- of these etf's is better than the market. that is good because volatility has been absent for years. so now these strategies look appealing because of volatility. alix: you talked about last year how hedge funds did not image

the s&p, and they are not supposed to. our etf's the same way? >> absolutely. comparing the average hedge fund to the s&p is nonsensical. one example is the merger arbitrage etf. it is one of those target companies that are being acquired. to capture the risk premium between the target, the announcing day, and the closing date, this one actually has the volatility that is half that of the market. when you look at the risk adjuster return it is better than the s&p. this is beating the merger hfr index of real merger hedge funds. this is one of the cases that in this particular area, this one is looking good compared to actual hedge funds, and it charges 75 basis points, about a third of what you get from a

real hedge fund. alix: does this take money away from hedge funds, or is this opening up hedge fund strategies to new markets? >> both. if you look at hedge funds, they took in $76 billion last year. etf's took in $243 billion. institutions continue to love them, but it is opening up these strategies to a wider audience. that is why goldman sees them going up to $2 trillion. alix: always good to see you on a friday. market makers is up next. ♪

live from bloomberg headquarters in new york. this is "market makers," with erik schatzker and stephanie ruhle. >> live from bloomberg headquarters in new york. this is "market makers," with erik schatzker and stephanie ruhle. >> in europe, it is a race against the clock. prime minister's in a race against the clock before they run out of money. >> do new financial regulations cause more problems than they solve? >> fighting off activist investors. cisco ceo john chambers knows how to do it. you are going to hear from him in a few minutes from now. good morning, everybody. it is a friday here in new york city.